In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD risks a probable drop to the parity zone.

Key Quotes

24-hour view: “While we expected GBP to weaken further yesterday, we were of the view that ‘1.0300 is likely out of reach for now’. However, GBP did not weaken further as it rebounded strongly to a high of 1.0934 before dropping back down to close at 1.0690 (-1.50%). The strong downward pressure has eased a tad and GBP is unlikely to revisit yesterday’s low of 1.0327. For today, GBP could continue to trade in a choppy manner and likely within a wide range of 1.0600/1.0900.”

Next 1-3 weeks: “Our view from yesterday (26 Sep, spot at 1.0600) still stands. As indicated, in view of the impulsive downward acceleration, a further decline in GBP to 1.0000 is not ruled out. That said, deeply oversold short-term conditions suggest GBP could trade above yesterday’s low of 1.0327 for a few days first. On the upside, a break of 1.1000 (no change in ‘strong resistance’ level from yesterday) would indicate that the weakness in GBP from about 2 weeks ago has stabilized.”